Targeted accommodation rate compromise – still flawed

7 April 2017

Media Release

Targeted accommodation rate compromise – still flawed, potentially illegal.

Talk of a compromise targeted accommodation rate that excludes camping grounds, backpackers and motels on the fringe of the city is underway at Council but not in a way that includes the tourism industry and business and may result in a response that is flawed and potentially illegal, says Chamber of Commerce Chief, Michael Barnett.

Watering down the proposal to leave only larger hotels to pay the rate means it is even less justifiable or defendable, he warned.

At the heart of what’s wrong with the proposal is that legally targeted rates should show a clear connection between those who pay the rate and those who receive the benefits from the services to be funded.

“Irrefutable evidence confirms that Auckland’s accommodation sector across the board receives less than 10% of tourism revenue benefits yet are being required to pay 100% of the cost. That alone makes it unfair, flawed and potentially illegal.”

If the proposal is reduced further to target just the larger hotels, the unfairness will be compounded. Not only will more than 90% of Auckland’s tourism sector be exempt but the property owners of buildings from which hotels are operated would be loaded with a significant rate increase on top of their business rates, which already have an unacceptably high differential. Those in the central city are also already paying a CBD Targeted rate and Heart of the City rates.

Targeting a small group of Auckland businesses with a massive rates rise, simply on the basis of “they can afford it” cannot be justified and is legally challengeable.

The proposed rate is based on capital value – not visitor throughput which varies significantly between high and low seasons, and the larger hotels advise that their rate bill would be increased by at least a million dollars, and in some cases much more.

Inevitably hotels would be pushed into cost savings, including staffing, refurbishment and in other areas.

At the same time tourism industry people, not just in the accommodation sector, are very clear in the considerable messaging the Chamber has received on this matter, said Mr Barnett.

“They would welcome participating with Council and industry representatives in a visitor promotion funding review where all beneficiaries of tourism have their voice heard.”

ends

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